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					A critique of the EU-Latin America Business Summit in Vienna

             A Corporate Europe Observatory Backgrounder
                      By Abel Esteban, May 2006

Parallel to the 4th EU-Latin America/Caribbean Summit in Vienna this week, large
corporations from both regions will gather at a Business Summit. Apart from
discussing business opportunities in different sectors, the 300 business
representatives attending the event are expected to demand that governments
speed up a whole range of free trade talks between the two regions. In stark
contradiction with the rosy image of European investments in Latin America
provided at the Business Summit, many EU-based corporations are facing
growing criticism over their social and environmental records in the region. In
Vienna, a number of these corporations will feature both with keynote speakers
at the Business Summit and face charges during the People's Tribunal on
European Transnationals.

Two Summits
Heads of State and Governments from 60 countries will meet in Vienna on May 12 th
for the 4th EU-Latin America/Caribbean (LAC) Summit. The summit agenda covers
issues ranging from human rights, environment and development co-operation, over
drugs and terrorism to trade negotiations1.

The EU-LAC Business Summit, also on May 12th in Vienna, is hosted by the Austrian
Ministry for Economics and the Austrian Federal Economic Chamber, a business lobby
group.2 The event, with the slogan “Bridging the two Worlds through Business and
Culture”, will bring together around 300 business leaders, each paying a 840 euro
conference fee.3 Topics discussed in plenary sessions include “Transcontinental
Business Opportunities” and “Finance and Trade”; while panels deal with issues like
Enterprise & Industry, Technology & Innovation, Nature & Energy, and Tourism &
Culture. Panellists include executives from Nestlé, BBVA, Siemens, Sidus, Union
Fenosa, Embraer, and other large corporations from both sides of the Atlantic.4

The Business Summit is not only a “forum for business opportunities and discussion on
economic topics between the EU and LAC countries”, but also very clearly a lobbying
event. The organisers promise that the conference “will provide a direct contact
between CEOs and Heads of States of both regions”.5 A set of recommendations from
the conference will be presented at the governments’ summit.6 Among the keynote
speakers are European Commissioner Benita Ferrero-Waldner (responsible for
External Relations) and Gunter Verheugen (Enterprise and Industry),7 as well as the
Mexican government’s Secretary of Economy Sergio García de Alba Zepeda. Also the
Vice-President of the European Investment Bank (EIB) and the President of the Inter-
American Development Bank (IDB) will speak at the Business Summit.

The European Commission is a strong supporter of the Business Summit, which the
EC hopes will bring added momentum efforts to launch talks on new free trade
agreements with Latin American and Caribbean countries. According to a
representative of the Commission’s External Relations department, EU Commissioners
Ferrero-Waldner and Verheugen will “highlight the benefits that may derive from
Association Agreements and the important ties that link Europe and LA“.8 More
specifically, the Commission representative explains, “we do hope that the forum will
contribute to advance our association agreements negotiations by actively engaging
the business world into the process”. Teaming up with corporate lobby groups and
inter-regional industry coalitions in order to increase pressure on other governments is
a central element in the European Commission’s strategy in international trade
negotiations. In EU-US trade talks and in the Doha Round of the World Trade
Organization (WTO), for instance, the Commission works closely with the Trans-
Atlantic Business Dialogue (TABD), which brings together the largest EU- and US-
based corporations.9 Similarly, in the context of free trade negotiations with the
Mercosur countries (Argentina, Brazil, Paraguay and Uruguay), the Commission has
since 1998 been a strong backer of the Mercosur European Business Forum (MEBF). 10
By encouraging large corporations from both sides of the Atlantic to develop a joint
agenda, the Commission hopes to overcome resistance from the Mercosur
governments. Siemens, Telefónica and BBVA are among the many active MEBF
companies that will be present at the Business summit in Vienna.11

MEBF member corporations are determined to use Vienna to lobby for speeding up the
EU-Mercosur talks,12 but in contrast to the previous EU-Latin America/Caribbean
Summit (Guadalajara, Mexico, 2004), there will not be any separate MEBF conference
this time. The reason is probably that the EU wants the Vienna summit to boost talks
on trade and investment liberalisation, not just for the Mercosur region but for all parts
of Latin America and the Caribbean.

 Business lobbying at former EU-LAC Summits

 When the previous EU-LAC Summit was held in Guadalajara in May 2004, the Mercosur
 European Business Forum (MEBF)13 held an Extraordinary Meeting together with high-level
 EU-Mercosur negotiators, including the trade ministers of Brazil and Argentina as well as
 Pascal Lamy, who was then the EU’s Trade Commissioner.14 The MEBF summarised the
 event as follow: “The candid debate and the quality of the opinions expressed made of the
 MEBF meeting an “unofficial” negotiation round, providing participants with a direct view of
 the process”.15

 The EU-LAC Business Organizations Summit that took place during the 2nd EU-LAC Summit
 in Madrid in May 2002 was co-hosted by European employers’ federation UNICE16 and their
 Mexican counter-parts PARMEX-CONCAMIN. The declaration from this Business Summit,
 which in contrast to the Vienna event was co-financed by the European Commission,
 specifically called for the launch of negotiations on new free trade agreements with Central
 America.17

EU Trade Ambitions
As was the case with the three previous EU-Latin America/Caribbean Summits, the EU
hopes Vienna will help advance its trade and investment agenda. The EU competes
with the US for economic dominance in the region and is already the most important
source of foreign direct investment for Latin America, and the biggest trading partner
for Mercosur and Chile.18 The EU signed free trade agreements with Mexico and Chile
back in 2000 and 2002. Negotiations on a similar treaty with the Mercosur countries
(Argentina, Brazil, Paraguay and Uruguay) were put on halt in September 2004, but
have now been resumed and the EU hopes that the Vienna Summit will bring new
momentum to these talks. The EU is very eager to convince the countries of the
Andean Community and Central America to agree to free trade negotiations as well.
Finally, EU is negotiating an Economic Partnership Agreement (EPA) with Caribbean
States (as part of the group of ACP countries). Brussels hopes to use these EPA talks
to achieve increased market opening in the Caribbean region. The EU is moreover
putting pressure on governments from all parts of Latin America and the Caribbean to
move ahead with regional integration. Homogeneous, deregulated and sufficiently large
markets are attractive for European exporters and investors.19
Tribunal Examines Reality of European Investments
Parallel to the official and the business summit, social movements and NGOs from both
regions will meet in Vienna on May from 10-13th for the “Linking Alternatives 2” Social
Encounter Forum.20 A strong motivation for organising this event is the growing
realisation that the EU’s ambitions towards Latin America – despite the rhetoric about
social cohesion and political dialogue – are very similar to the controversial US-
proposals for a Free Trade Agreement of the Americas (FTAA). In Vienna, civil society
groups will discuss emerging economic, political and social alternatives to the
neoliberal approaches promoted by both the EU and the US.

As part of this Forum, a Tribunal will be held on human rights violations in Latin
America committed by transnational corporations based in the EU and their
subsidiaries. The Tribunal will evaluate evidence against specific corporations, and will
decide whether grounds are sufficient to press charges in a follow-up trial session.
Tribunal cases cover five areas, ranging from public services (water and electricity),
over natural resources (oil, tourism, forests, mining, etc.) and food industries, to the
financial sector.21

A number of corporations will experience very different forms of exposure in Vienna.
BBVA, Unión Fenosa and Telefónica, for instance, will be represented with key note
speakers and panellists at the Business Summit while facing serious charges during
the Tribunal. The many cases brought against these and other companies show that
growing volumes of European investment in Latin America by no means automatically
benefits the region’s people and environment. The cases are a dire warning against the
EU’s agenda of accelerated deregulation of trade and investment. The organisers of
the tribunal call for the power of these corporations to be scaled back and for
establishing standards and binding regulations, rooted in the rights of peoples, for
accountable performance of these firms.


 Corporate (Ir)responsibility

 Spanish Bank BBVA, whose General Director is a key note speaker at the Business Summit,
 is directly involved in 4 out of 25 Tribunal cases (and indirectly in others as a significant
 shareholder of companies like Repsol-YPF and Telefónica). BBVA, for instance, is implicated
 in the 503 km long Heavy Oil Duct (OCP) Venture in Ecuador. This project endangers
 Amazonian and Andean nature reserves by poisoning soils and water, and violates local and
 indigenous communities rights and livelihoods.22 BBVA also finances the controversial paper
 pulp factory in Fray Bentos (Uruguay), with serious environmental, economic and social
 impacts that have caused a diplomatic crisis between Uruguay and Argentina.23 BBVA has
 also been denounced for its slandering of civil society groups involved in education, health,
 human rights and peace projects in Latin America. 24

 Extremely grave are the accusations against the electricity multinational Unión Fenosa,
 whose Managing Director will be a panellist during the Business Summit.25 The Tribunal will
 hear charges against the company including abusive tariffs, low-quality service with frequent
 power cuts, failure to fulfil investment obligations for maintenance and network improvement,
 massive dismissals, labour rights violations, as well as destruction of the water sources of
 local and indigenous communities.26 Shockingly, 27 trade unionists were murdered by
 paramilitary troops during the privatisation process in Colombia’s Caribbean coastal area,
 where power utilities are now run by Unión Fenosa.27

 Telecom giant Telefónica, with headquarters in Spain, is the second-ranking corporation in
 Latin America in terms of sales volume.28 In Vienna Telefónica will be accused of being
 responsible for the violation of labour rights in Peru.29 The company has also repeatedly been
 accused of irresponsible tariff increases in Chile and Peru.30
 Repsol-YPF faces lawsuits for ecological damage in Argentina, Peru and Bolivia. Some of
 corporation's Latin American subsidiaries have been accused of illegal lands occupation,
 bribery, continuous oil spills, water and soil pollution, destruction of indigenous livelihoods,
 and labour rights violations. According to International Amnesty, Repsol-YPF is responsible
 for continued militarization by funding security forces linked to paramilitary groups.31

Vienna Summit: Business as Usual?

The Business Summit, with strong endorsement by the European Commission and EU
governments, continues a deeply problematic practice that emerged in the mid-1990's,
at the time when the EU adopted a more aggressive neoliberal trade agenda. The
problem is not only that large corporations enjoy undue privileged access to
government leaders and negotiators during events like the Business Summit. The
deeper problem is that EU governments shape their international trade policies around
the interests of large corporations and pursue strong collaboration to promote their
shared objectives.

In the light of the record of gross misbehavior by many EU-based transnational
corporations and the more general failure of the neoliberal development model in Latin
America, governments ought to use the Vienna summit to explore new approaches.
Instead of steam-rolling ahead with trade negotiations serving the interest of large
corporations, governments should re-assess the flawed model which has over the last
decades caused a harmful over-dependency on often irresponsible corporations.

A starting point for exploring better approaches could be the People's Trade Treaty
proposed by newly elected Bolivian President Evo Morales last month, a model in
which increased trade and investment flows are just not a goal in itself but must be
made to serve sustainable, just and people-centred development.32
1
  http://europa.eu.int/comm/world/lac-vienna/objectives_en.htm
2
  The official programme includes dinners and sightseeing on 11th and 13th of May, but the actual conference will take
place only the 12th. See: http://www.eulac2006.com/
The Austrian Federal Economic Chamber is the Austrian Foreign Trade Organisation. It is financed entirely by Austrian
companies and incorporates Austria's trades associations. See: http://www.austriantrade.org
3
  http://europa.eu.int/comm/world/lac-vienna/events/business.htm
In contrast to the Business Summit entrance fee of 840 euro, the “Linking Alternatives 2” Forum is accessible at a
(voluntary) solidarity fee. See: http://www.alternativas.at
4
  Ibid. eulac2006
5
  “Realizarán en Viena foro empresarial UE-América Latina”, Notimex, El Universal Online, March 27th 2006,
http://www.eluniversal.com.mx/notas/339155.html
6
  “Empresarios de Europa y Latinoamérica se reunirán con 60 jefes de Estado en Viena”, Jesús Hernández, Expansión
Digital, April 20th 2006, http://www.expansion.com.mx/
7
  Email correspondence with Matteo Gomirato, European Commission, Assistant Desk Officer, Directorate-General for the
External Relations. May 3rd 2006.
8
  Ibid.
9
  For detailed information regarding privileged access and influence enjoyed by EU corporations, see for example:”Under
the Influence”. Action Aid, January 2006. Available at:
http://www.actionaid.org.uk/doc_lib/74_6_under_the_influence_final.pdf; and - "The EU Corporate Trade Agenda",
Seattle to Brussels Network. Available at http://www.s2bnetwork.org/EU_corporate_trade_agenda.pdf
10
   ”Mercosur for sale?”, Claudia Torreli, CEO & TNI Info brief, 2003. Available at:
http://www.corporateeurope.org/eumercosur/MercosurForSale.html
11
   Siemens, a prominent co-organiser of the Business Summit, coordinates the MEBF Working Group on Market Access.
Telefónica and BBVA provide panel speakers to the Summit. In 2000, Repsol-YPF President, Alfonso Cortinas, became
MBEF President and actively lobbied EU and Mercosur negotiators to advance business demands in the trade
negotiations. Ibid.
12
   http://www.mebf.org
13
   The MEBF is composed by leading EU and Mercosur companies, as well as their main business organizations, with the
aim of developing join trade policy recommendations. MEBF offers a platform to address governments “with one voice”,
as the more effective method to influence in the future trade area regulations. See: http://www.mebf.org
14
   The European Commission was also represented by other high-level officials like Karl Falkenberg and Hervé
Jouanjean. From Mercosur, the meeting was attended by Brazilian trade minister Luiz Fernando Furlan and his
Argentinean colleague Martín Redrado.
15
   http://www.mebf.org/en/document/SummaryGuadalajarameeting.pdf
16
   UNICE is the Federation of European Employers, while COPARMEX is the Mexican Employers Organization and
CONCAMIN the Mexican Industry Chambers Confederation.
17
   http://europa.eu.int/comm/world/lac/bf.htm
18
   http://europa.eu.int/comm/external_relations/la/index.htm
19
   Ibid.
20
   For more information see: http://www.alternativas.at or http://www.tni.org/acts/tribunal.htm
21
   http://www.alternativas.at/English/indexenglish.htm
22
   “OCP no cumple estándares del BM”. Acción Ecológica, 2001. http://www. accionecologica.org
23
   See for example: http://www.cedha.org.ar
24
   The bank accounts of Enlace Civil (México) were closed following unproven money-laundry allegations, see:
http://www.enlacecivil.org.mx/; a similar incident happened to the San José de Apartadó “Peace Community” (Colombia),
see: http://www.solidaridad.net/noticias.php?not=3040
25
   “¿En busca de un nuevo “El Dorado”?: La Europa de las transnacionales en América Latina. Impactos y Alternativas”
CENSAT Agua Viva, April 2006.
26
   “La Deuda Ecológica Española. Impactos ecológicos y sociales de la economía española en el extranjero” Miguel
Ortega Cerdá (c), 2005, p 161-162.
27
   “Informe Seguimiento social en el Caribe colombiano a la corporación Unión FENOSA” Martha Rincón. Censat Agua
Viva. 2004. Available at: http://censat.org/Documentos/Corporaciones/Seguimiento_Social_Caribe_Union_Fenosa.pdf
28
   According to CEPAL data (2005). In “Telefónica, una empresa para todos los públicos” Pedro Ramiro. Observatorio de
las Multinacionales en América Latina. Boletín OMAL N.12, Abril 2006. Available at: http://www.omal.info/docs/dc179.pdf
29
   Accusation briefing against Telefónica, submitted to the People’s Tribunal on European Transnational organisers.
Programa Laboral de Desarrollo (PLADES) and Sindicato Único de Trabajadores de Telefónica (SUTTP), 2006
30
   http://www.omal.info
31
   For an overview of Repsol-YPF’s record and the civil society opposition, see Miguel Ortega Cerdá, 2005; or “La
recolonización: Repsol en América Latina: invasión y resistencias” Marc Gavaldá, 2003, Icaria Editorial.
32
   See also: http://www.bilaterals.org/article.php3?id_article=4585